Mumbai: The benchmark BSE Sensex surrendered early gains on Wednesday to end in the negative terrain by shedding 68 points on escalating tensions between India and Pakistan.

Investor sentiment took a beating after news of rising tension on the border broke, brokers said.

After rising nearly 400 points in early trade, the Sensex turned negative triggered by across-the-market selling by participants. The index finally settled 68.28 points, or 0.19 per cent, lower at 35,905.43.

The gauge had lost 239.67 points Tuesday.

The 50-share Nifty also fell 28.65 points, or 0.26 per cent, to 10,806.65. Intra-day, it moved between 10,939.70 and 10,751.20.

The rupee depreciated 25 paise to 71.32 after touching a low of 71.49 against the dollar (intra-day), also hitting trading sentiments.

Fears that foreign institutional investors (FIIs), who have been pumping sizeable funds into the Indian bourses in the past few sessions, may slow down their activity, too cast a shadow over domestic equities, experts said.

Pakistan on Wednesday claimed that it shot down two Indian military aircraft over Pakistani air space and arrested one of the pilots.

Later in the day, India’s External Affairs Ministry said Pakistan has used its Air Force to target military installations in India in response to Indian counter-terrorism operations but their attempts were foiled successfully though one Indian pilot is “missing in action”.

The move came after the Indian Air Force said on Tuesday they struck Jaish-e-Mohammad’s (JEM) biggest camp in Pakistan in a major “pre-emptive” action, killing a large number of militants and trainers of the Pakistan-based group.

Domestic institutional investors sold equities to the tune of Rs7.20 billion, while Foreign institutional investors (FIIs) bought shares worth a net Rs16.74 billion, provisional data showed.